Incoterms are standard trade terms published by the International Chamber of Commerce. In the 2020 edition they define who arranges transport, who pays which costs, and the point where risk passes from seller to buyer. They do not decide who owns the goods or when payment is due.
The five terms buyers ask for most
- EXW (Ex Works): the buyer collects the goods at the seller’s premises and arranges transport and export clearance. Least responsibility for the seller.
- FCA (Free Carrier): the seller hands the goods to the carrier named by the buyer at a named place and clears export. Suited to container shipments.
- FOB (Free on Board): for sea freight. The seller loads the goods on the vessel at the named port and clears export. Risk passes once the goods are on board.
- CIF (Cost, Insurance and Freight): for sea freight. The seller pays freight and minimum insurance to the destination port, but risk still passes at loading.
- DAP (Delivered at Place): the seller delivers to the named place ready for unloading and carries the risk until then. The buyer clears import.
How to choose
Choose the term that matches who can get better freight rates and who is more comfortable managing the route. Buyers with their own forwarder often prefer FOB or FCA. Buyers who want one price to their port may ask for CIF. Whatever the term, always name the place or port, for example FOB followed by the named loading port.
Delivery terms in practice
At Kasma Trade, delivery options are reviewed separately for each deal, and CIF is offered only when the route and shipping conditions make it possible. State your preferred term in the buyer requirement form so that offers arrive on the same basis.
